Understanding Ex-gratia, Bonus, and Employment Benefits in the Workplace

Hi friends,

I just signed in to this group. Could anyone tell me if it is mandatory for the organization to pay ex-gratia on resigning from the services? So far, as I know, the eligibility for ex-gratia in such a circumstance must be proved and must be mentioned in the appointment/confirmation letter to avail this benefit.

Now, if the appointment letter specified BONUS, and after a few years, the employee does not fall into the group to receive a bonus, the company pays ex-gratia year after year. The company also provides a payslip confirming the payment of ex-gratia. Does this confirm the eligibility of the candidate for getting ex-gratia while leaving the company? Could anybody shed some light on this issue?

Shantanu

It is not mandatory to pay ex-gratia. It is the employer's discretion to pay an amount that may be called ex-gratia or over and above bonus. But it is purely mandatory to pay a bonus to all eligible employees under the provisions of the Act.

Regards,
Suresh

Dear Shantanu,

If the company specifies a bonus in the appointment letter and later pays the ex-gratia by mentioning it on the payslip, this practice should be continued until the employee leaves the organization. The payslip would confirm that the employee is entitled to the ex-gratia.

The company should stop paying ex-gratia and mentioning it on the payslip when the employee is no longer eligible.

Regards,
Suresh

Thank you, Suresh, for the reply you posted. When the company pays ex-gratia, it is not mentioned in the salary slip since it is not given with the salary. However, when it is disbursed, a payslip is provided, similar to the salary slip, only mentioning the ex-gratia given. This practice has continued this year as well. Still, I resigned before the ex-gratia was disbursed. The ex-gratia is for the period April-March 2006-07, while I resigned in September 2007, thus completing my tenure in the company during the ex-gratia disbursement period.

Do you think this fulfills the eligibility criteria, and should the ex-gratia be included when settling my accounts with the company? Could you also inform me if there are any laws or acts related to ex-gratia, although I assume there aren't any. I look forward to hearing your opinion once again.

Shantanu

Dear Shantanu,

I am sorry for not responding to you immediately. You are not eligible for ex-gratia at the time of disbursement. As I told you, it is at the discretion of the employer to disburse ex-gratia as they are not bound by any law. You were not in service at the time of disbursement. You would have received it if you were with the employer at the time of disbursement.

Now, due to an amendment of the act, please check whether you are eligible for a bonus since it has a retrospective effect from 2006-07.

I hope this clarifies the situation.

Regards,
Suresh